What Does Vogue Acquisition Mean For Johnson & Johnson (NYSE:JNJ)?

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Johnson & Johnson (NYSE:JNJ) is acquiring Vogue International after announcing its intention on June 2. Vogue is a privately-held personal beauty company. The deal is worth $3.3 billion and will formally close in 3Q2016.

The acquisition of Vogue is expected to boost Johnson & Johnson’s existing beauty business, thus paving way for more revenue streams. Additionally, the acquisition means that Johnson & Johnson has reduced the number of its competitors in the beauty business. As such, the buyout of the competitor creates an opportunity for Johnson & Johnson to expand its market share. There is also the opportunity for JNJ  to lower its marketing expenses because it now has fewer competitors in the personal care and beauty space to fight as the industry has consolidated.

What’s Vogue bringing to the table?

Vogue boasts a portfolio of strong beauty brands. Its products include OGX shampoos, Maui Moisture, Proganix and FX hair products.

One of the successful marketing strategies that Vogue employs is strong on-shelf presence. The company also uses fancy color packaging so that it products stand out among the competition on store shelves.

A global presence

Vogue’s products are sold in over 40 countries including the U.S. It generated sales of $300 million in 2015, which rose 25% over the prior year sales. The company’s most prominent institutional investor is Carlyle Group LP, which took its stake in 2014.

Vogue will specifically improve Johnson & Johnson’s personal care and beauty brands such as Neutrogena and Clean & Clear. There is a cross-selling opportunity here for Johnson & Johnson as it adds Vogue to its portfolio.

Before JNJ rounded up the deal, Vogue was being eyed for a potential buyout by Henkel and Unilever PLC (NYSE:UL) among others. JNJ has grabbed an asset that rivals wanted to own to bolster their own competitive edge in the personal care space.

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